A couple of days ago, Tim posted the replies received from Canada Revenue Agency regarding FBAR, in response to a lengthy series of questions tabled in the House of Commons by Huong Mai MP (NDP), the NDP Finance Critic and the Vice-Chair of the House of Commons Finance Committee.
Mr. Mai had also posed a series of questions about FATCA. Today I received by email from Mr. Mai, in response to my email to him last Friday, PDF copies of the CRA and other Government of Canada replies to both series of questions. The answers concerning FBAR have already been posed on this website, but I haven’t seen the answers concerning FATCA. (Please forgive any oversight if they’ve been posted and I missed them.) So I am posting the PDF file of the replies on FATCA, below.
BTW the reply I received, from Mr. Mai’s Parliamentary Assistant, arrived in one business day (I sent my email at 14:22 on Friday and got the reply at 16:34 on Monday). That is spectacularly faster than any reply I’ve ever received from any government or MP office on anything, by email. Kudos to the NDP in general, and to Mr. Mai in particular, on this one!
The government replies aren’t especially informative. Basically all they say is that our government is aware of privacy, banking laws, and other concerns about FATCA. Our government isn’t happy about FATCA and continues discussions with the US government to try to get some mutually-acceptable changes. They don’t, and can’t, really say anything about how this will unfold until the final regulations are announced. For obvious reasons they aren’t going to publicize details of what discussions and proposals are still on the table.
However one interesting reply is the following:
“Insofar as Citizenship and Immigration Canada (CIC) is concerned, CIC does not have a list of Canadian American dual citizens and has no information regarding the Foreign Account Tax Compliance Act (FATCA).”
If CIC doesn’t have a list of dual citizens, I very much doubt any other Goverment of Canada agency does either. Which could make it rather difficult for any consistent search for dual citizens by IRS or anyone else, given the constraints of current privacy and banking legislation in this country. And I can’t imagine any Canadian government, including the present one, setting up a registry of dual citizens of Canada and any other country — for all sorts of political and legal reasons.
I wouldn’t want to be a banker or investment broker in Canada right now, facing the rock-and-hard-place choices that are going to confront them if they go foward into compliance under our current legal framework. And I wouldn’t want to be the politician, even in a majority government, that tried to change that legal framework significantly. (Even majority governments have to face voters eventually, and given the number of naturalized citizens in this country from all over the world, there are some potentially very hot-button issues here that any competant opposition party could have lots of fun with in an election campaign.) But that’s my personal take on things; read the Government’s reply to Mr. Mai’s questions for yourself.
Sorry, was just trying to add a little humour but was obvioisly a mistake
@ monalisa1776
Your humour was noted, and caught by myself. However, as one who lives with a husband who enjoys engaging in “humour” that sometimes “misses”, I appreciate that humour can be a very “risky” form of communication of which I seldom have the courage to try on. I am definitely the more serious thinker. However, it is good to try to find some levity in these heavy times…not easy though.
@Therapist, thank you. I realize of that I can’t generalize about everyone, of course, but have noted how the British tend to be able to laugh at themselves and their politicians far more so than in America. It’s one of their best traits. And I agree that unfortunately many here might not ‘get it’, plus one never knows who might be reading this blog…
I agree with Calgary that it’s thus far better to just remain polite and level-headed here, and keep my jokes for the pub 😉
@monalisa1776
I wonder what a “Spitting Image” puppet for Obama, Levin,…… would look like 🙂
1. Look, my credit union has no evidence of where I was born.
2. If they ask — and they will not — I will say I am a Canadian citizen.
3. The end.
@JoeSmith: “If they ask — and they will not…”
You don’t say if you are a (dual) US citizen or not, but suppose you are. And suppose you live in the UK, where banks and credit unions may insist that you list ALL of your various citizenships on a new account application. Do you advocate economy with the truth? Or something else?
Yes, there’s a lot of unfounded fear about this here at the moment. But… there’s also a lot of well-founded fear. And for that part of it, closing your eyes and just hoping it’ll go away is not appropriate.
While it seems unlikely that a non-US credit unions are going to “turn you in”, it’s very, very easy to imagine them simply turning you away because you’re a US citizen. That could make it hard to save for retirement, invest, or even find regular employment. THAT is the real fear.
They have not asked me yet or turned me away. 17 years ago the US Consulate said over the phone that if I intended to not remain a US citizen when I became a citizen, then I was no longer a US citizen. This is what I believe and this what I would tell anyone who asked me in an official capacity.
@JoeSmith: “17 years ago the US Consulate said over the phone that if I intended to not remain a US citizen when I became a citizen, then I was no longer a US citizen.”
Then good for you. However, please realize before posting over and over again that we all have to “chill out” that many of the folk here are not in your situation. You personally may face no issues going forwards, but that’s definitely not true of everyone here.
Any issues that exist are being created by the persons themselves… I will return in six months.
@JoeSmith: “Any issues that exist are being created by the persons themselves…”
No. Some perhaps. But not all.
@Joe Smith – how certain are you of the credit union safety, really? I’m including a link to a report from the Credit Union Central of Canada, June 2011, that I ran across a while ago and saved.
An excerpt,”There may be implications for the
credit union system in at least a couple of areas: (i)
connected party rules may join credit unions and their
affiliates, such as Credential, Ethical Funds and
CUMIS, causing withholding tax issues for the affiliates
if credit unions are not compliant; and (ii) other FFIs
may require credit unions to provide evidence of
compliance with FATCA in order to transact business.”
http://www.cucentral.ca/PAR30JUN11
– Don’t get me wrong, I hope like heck you’re right, but there’s a lot of financial pressure that can be brought to bear…
If they ask me if I am a Canadian citizen, the answer is yes.
If they ask me if I am a US citizen, the answer is no.
@Joe Smith
Watcher point is very valid. Not everyone on this site has the same, identical situation. What works for you perhaps will not work in other situations or for the ’emotional well-being’ of others on this site. People are not necessarily “creating these issues for themselves”.
Regarding CUs becoming deemed compliant:
To become deemed-compliant as opposed to fully compliant, an FFI would still have to be able to prove to the IRS that 98% of its account holders are not American citizens. In the first instance, this means changing how they register accounts and using indicators of US citizenship, such as birthplace and asking questions of new account holders and then eventually coming back to already established account holders and then asking them. This is not a simple process for many entities and will have to apply to all their accounts. If a US citizen misleads a deemed-compliant FFI about his citizenship, and if you thought FBAR had onerous penalties, you ain’t seen nothing yet.
Once the withholding regime begins, then if you are not deemed compliant or fully compliant, you are on the IRS’s sh** list, and all transactions involving noncompliant FFIs to and from fully compliant FFIs will be subject to withholding. This will cause a liquidity crisis in international banking, but from accounts I’ve heard so far, I don’t believe this bothers the IRS at all. As someone said, the law is the law is the law, which is the IRS’s approach. And unless that changes, I don’t believe the IRS will change any of the FATCA provisions…Just postpone the implementation dates to allow FFIs to become compliant.
It reminds me of the Monty Python sketch where there are a bunch of government ministers trying to come up with new ways to raise revenue: “I have an idea! Let’s tax all foreigners living abroad.”
That is essentially what FATCA is.
I think this is the Monty Python Sketch you are talking about. There are some other Ideas for the IRS there too… 🙂
http://youtu.be/pmgcylAxjfY
Love the skit, but let’s not give the IRS any more ideas than it already has …
Thanks for brightening a cloudy wet afternoon with this video clip. It’s the first one I’ve seen on a post on this forum, that I actually watched through to the end and thought helpful — in this case on the principle that laughter is often the best medicine.
@schubert1975. Oh, there are others if you look around a bit. Monty Python comic relief helps sometimes!
🙂
@Everyone
On a related note I found an item on the UK’s recently released budget that indicates they will passing implementing legislation for the FATCA Five agreement in the 2013 budget(exactly one year from now) after consulations with the financial industry in the UK. So 2013 appears to be the timeline for any changes to actual legislation.
UK Budget Statement
2.65 Information powers – The Government announced on 8 February 2012 that it has agreed to work with the governments of France, Germany, Italy and Spain to facilitate exchange of information between financial institutions and the US Internal Revenue Service for the purposes of the US Foreign Account Tax Compliance Act (FATCA), which aims to combat cross-border tax evasion. HMRC will consult with the financial institutions affected about how this can be done, with a view to legislation in Finance Bill 2013.
Current Account Opening requirements in the UK
https://www.metrobankonline.co.uk/Personal/What-you-will-need-to-open-an-Account/How-to-open-an-Account1/
@
While it is not the UK government formal budget presentation supposedly a request for comments is going to be issued by HMRC(UK equivilent of CRA) on FATCA prior to the summer according to several publications I found.